• Pointing Out the Obvious
      • RE: Down goes the Dow 2/19/2016 10:13AM - in reply to Maserati
      • Pointing Out the Obvious
      • Maserati wrote:
        Pointing Out the Obvious wrote:
        Maserati wrote:
        POTO we are not tinfoil hat people, they believe that there is some underlying nefarious conspiracy to achieve some sinister or malevolent purpose. In general, we're just going over known facts and speculating as to future effects, not past or current motivations.
        I find this laughable given, for example, your reaction on this thread to things like employment numbers published by the government. You are not to be taken seriously by rational people. My fear is that you may have turned Igy to the dark side. That would be too bad.
        In considering whether or not to respond, I came to the conclusion that to not respond would be to do you a disservice. You should know that you're neither fooling, nor convincing, anybody who is worth talking to, nor are you contributing anything worth considering.

        There are some forgiving and thoughtful people on this thread, you would be well-advised to avail yourself of their patience and generosity.
        The only disservice done here is your display of chutzpah in speaking for everyone else. There are many who were here long before you and who will still be here long after the last echo of your self-righteousness has faded away from here.

        Put that in your tinfoil hat.
    • Ghost of Igloi
      registered
      • RE: Non-GAAP Accounting 2/19/2016 10:27AM - in reply to Maserati
      • Ghost of Igloi
        registered
      • Maserati,

        Your view is similar to what was included in the article I posted. Unfortunately just watch CNBC or Bloomberg on any given earnings day and you will see the large number of highlighted "adjusted earnings beats" (non-GAAP earnings). It is pure BS and most who post here have no clue to how inaccurate and deceiving those numbers are. When the market breaks the third bubble in this century non-GAAP earnings will be a topic that becomes "rediscovered," but was there all the time.

        Igy
    • Maserati
      • RE: Non-GAAP Accounting 2/19/2016 11:32AM - in reply to Ghost of Igloi
      • Maserati
      • agip, more on "malinvestment", and more on my comment on value:

        As Soros is quoted on a wikipedia page, "Mr Paulson's proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief."

        Government policy, picking winners and losers by subsidizing some and not others.

        This refers to the reverse auction and the asymmetry of information. Like Soros has said, the idea was good, but wasn't worked out properly. It was investment, but malinvestment.
    • Maserati
      • RE: Non-GAAP Accounting 2/19/2016 11:33AM - in reply to Maserati
      • Maserati
      • "Unless the Treasury overpays for the securities, the scheme would not bring relief."

        The critical part that must be understood. It's difficult to articulate, but true.
    • Business Insider
      • RE: Non-GAAP Accounting 2/19/2016 11:34AM - in reply to Ghost of Igloi
      • Business Insider
      • "Some stock market pundits are highly critical of companies that repeatedly emphasize "adjusted" (also known as non-GAAP or pro forma) earnings over GAAP earnings.

        However, income statements reported based on GAAP don't always reflect the ongoing performance of a companies underlying operations. For example, a company may write-down an asset or restructure its organization. These actions usually come with large one-time costs that distort company profits."
    • Ghost of Igloi
      registered
      • RE: Non-GAAP Accounting 2/19/2016 11:46AM - in reply to Business Insider
      • Ghost of Igloi
        registered
      • LNKD, NOW, CRM, FIT, TWTR, GPRO, TSLA, DATA, SYSS.....

        Pull their 8Ks and have a look for yourself rather than be led around by your nose ring.

        Igy
    • David Bianco
      • RE: Non-GAAP Accounting 2/19/2016 11:47AM - in reply to Business Insider
      • David Bianco
      • S&P 500 GAAP EPS has both a cyclical and secular tendency to understate EPS appropriate for valuation. During recessions GAAP EPS can collapse owing to large asset write-downs, which crushes reported EPS relative to continuing EPS. A similar distortion can occur when a company incurs large restructuring or litigation costs. Thus, most equity analysts reverse such charges from their pro forma EPS metrics as maintained in their models and posted to the major data services to prevent distortions in the underlying operating profit trend and to help better forecast future EPS.
    • Ghost of Igloi
      registered
      • RE: Non-GAAP Accounting 2/19/2016 11:53AM - in reply to David Bianco
      • Ghost of Igloi
        registered
      • Davie,

        That statement is such a joke. Most analyst use non-GAAP, pro-forma because it creates a positive narrative. Non-GAAP sure worked out well for LNKD. Drop Robert Schiller, Noble Prize winner a note and tell him he needs to change his metric for EPS to non-GAAP accounting. It would be good for a laugh.

        Igy
    • David Bianco
      • RE: Non-GAAP Accounting 2/19/2016 11:57AM - in reply to Ghost of Igloi
      • David Bianco
      • However, just because a cost is infrequent does not mean it is non-recurring. Thus, it is often argued by some strategists and many quants that GAAP EPS for the overall S&P 500 over a full economic cycle will represent EPS appropriate for valuation purposes. We would agree if it weren’t for that about half of the difference between GAAP and pro forma EPS measures over full economic cycles is from asset write-downs.
    • Ghost of Igloi
      registered
      • RE: Non-GAAP Accounting 2/19/2016 12:04PM - in reply to David Bianco
      • Ghost of Igloi
        registered
      • Davie,

        You have no comparable standard under non-GAAP. Alcoa has been writing off asset losses as one time items for years. The abuse of not including stock based compensation is an all to familiar occurrence among the technology sector.

        Igy
    • Maserati
      • RE: Non-GAAP Accounting 2/19/2016 1:17PM - in reply to Ghost of Igloi
      • Maserati
      • The issue of non-GAAP is a real one. It is definitely used to support a positive narrative, but that's not a problem if the underlying reality is indeed positive.

        IMO a sort of normalized GAAP would be most interesting, as it would take into account not only one year's "one-time charges and writedowns", but those of multiple years--and multiple years of "normal" activity, as well.

        I know the normalization I have in mind, but I can't recall it at the moment.

        Anyway DJIA at around 16.4k late Friday afternoon. See you all on Monday morning
    • agip
      registered
      • RE: Non-GAAP Accounting 2/19/2016 1:32PM - in reply to Maserati
      • agip
        registered
      • Igy

        Not sure why you have to be so binary

        Sure companies and analysts abuse proforma type reporting, and you are right to condemn that.

        but

        you should be able to agree that issue of non-cash writedowns is real. If a company writes down an asset...it wrecks GAAP earnings once and only once...so if you are trying to value a company for its future earnings...using GAAP earnings can be misleading. The writedown won't happen again.

        You can agree to that, no?
    • Ghost of Igloi
      registered
      • RE: Non-GAAP Accounting 2/19/2016 2:48PM - in reply to agip
      • Ghost of Igloi
        registered
      • agip,

        More often than not non-GAAP earnings hides poor management and expenses that are a real cost of doing business. As outlined in the article I posted there are other ways to highlight one-time items that are truly one-time.

        Igy
    • Ghost of Igloi
      registered
      • RE: Non-GAAP Accounting 2/19/2016 4:46PM - in reply to Pointing Out the Obvious
      • Ghost of Igloi
        registered
      • POTO,

        There is no avoiding of the question, I just don't agree. If I remember my debits and credits from my accounting classes it is a very simple answer. The one- time items have been serially misused to gloss over companies making bad decisions. If I buy asset at X and it goes to Y, that is its value, whether it is a plus or a minus. What about the tax benefit from the loss? I guarrantee that if is a plus it will never be a one-time item.

        Igy
    • Pointing Out the Obvious
      • RE: Non-GAAP Accounting 2/19/2016 5:09PM - in reply to Ghost of Igloi
      • Pointing Out the Obvious
      • If you disagree, then say so. Agip brings a lot to this thread and deserves to be respected. He doesn't deserve your usual run around.
    • Ghost of Igloi
      registered
      • RE: Non-GAAP Accounting 2/19/2016 5:31PM - in reply to Ghost of Igloi
      • Ghost of Igloi
        registered
      • POTO,

        I agree that agip brings a lot to the thread and if the implication was to disparage him or his comment I apologize. I was in a hurry to leave the office and make my barber appointment. Yes I go to a barber and not a stylist.

        Have a good weekend.

        Igy